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Customs Notification, Circulars Anti-Dumping Notifications (DGAD) NOTIFICATION NO. 14/10/2002-DGAD DATE 21/09/2002 (PART-I)

NOTIFICATION NO. 14/10/2002-DGAD DATE 21/09/2002

Anti-Dumping Investigation concerning imports of Caustic Soda from People's Republic of China and Korea RP.
No.14/10/2002-DGAD - Having regard to the Customs Tariff Act 1975 as amended ill 1995 and the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, thereof:

A. PROCEDURE

1. The procedure described below has been followed with regard to investigation:

i) The Designated Authority (hereinafter also referred to as Authority), under tile above Rules, received a written application from M/s Alkali Manufacturers Association of India (AMAI) (hereinafter referred to as petitioner) on behalf of the domestic industry, alleging dumping of Sodium Hydroxide commonly know lT as Caustic Soda (hereinafter also referred to as subject goods) originating in or exported from People's Republic of China and Korea RP (hereinafter referred to as subject countries). The petition was also supported by M/s DCW Limited, Mumbai, M/s Gujarat Alkalis & Chemicals Limited, Vadodara, Gujarat, M/s Gujarat Alkalies, Dahej, M/s Search Chem Industries Limited, Mumbai, 1N'I/s Indian Rayon and Industries Ltd., Veraval, Gujarat, M/s Grasim Industries, Nagda, M.P., M/s SIEL Chemical Complex, Patiala, Punjab, M/s Bihar Caustic & Chemicals, Ltd., Jharkhand, M/s Jayshree Chemicals Limited, Orissa, M/s Andhra Sugars Limited, Tanaku, Bilt Chemicals, DCM Sriram, New Delhi and Punjab Alkalies & Chemicals, Chandigarh.

ii) Preliminary scrutiny of the application filed by the petitioner revealed certain deficiencies, which were subsequently rectified by the petitioner. The petition was, therefore, considered as properly documented.

iii) The Authority on the basis of sufficient evidence submitted by the petitioner decided to initiate the investigation against imports of subject goods from People's Republic of China and Korea RP. The authority notified the Embassies of People's Republic of China and Korea RP in New Delhi about the receipt of dumping allegation before proceeding to initiate the investigation in accordance with the sub-Rule 5(5) of the Rules.

iv) The Authority issued a public notice dated 14.5.2002 published in the Gazette of India, Extraordinary, initiating Anti-Dumping investigations concerning imports of the subject goods classified under custom Code 281511 and 281512 of Schedule I of the Customs Tariff Act, 1975 (28151101, 28151102 and 28151200 of ITC) originating in or exported from People's Republic of China and Korea RP.

v) The Authority forwarded a copy of the public notice to the known exporters (whose details were made available by petitioner) and gave them an opportunity to make their views known in writing within forty days from the date of the letter in accordance with the Rule 6(2):

vi) The Authority forwarded a copy of the public notice to all the known importers (whose details were made available by petitioner) of subject goods in India and advised them to make their views known in writing within forty days from the date of issue of the letter in accordance with the Rule 6(2).

vii) Request was made to the Central Board of Excise and Customs (CBEC) to arrange details of imports of subject goods made in India during the past three years, including the period of investigation.

viii) The Authority provided a copy of the petition to the known exporters and the Embassy of the subject countries in accordance with Rules 6(3) supra. A copy of the non-confidential petition was also provided to other interested parties, wherever requested.

ix) The Authority sent a questionnaire to elicit relevant information to the following known exporters/producers, in accordance with the Rule 6(4)

x) The Embassy of the subject country in New Delhi was informed about the initiation of the investigation in accordance with Rule 6(2) with a request to advise all concerned exporters/producers from their country to respond to the questionnaire within the prescribed time. A copy of the letter, petition and questionnaire sent to the known exporters was also sent to the Embassy of the subject countries in accordance with Rule 6(3).

xi) A questionnaire was sent to the following known importers/user associations of the subject goods in accordance with Rule 6(4):

Response/information to the questionnaire/notification was filed by the following exporters/producers:–

Response/information to the questionnaire/notification was filed by the following Importers/user Associations.

xii) Information regarding injury was sought from the petitioner(s), which was also furnished by the petitioner. The injury parameters of the following domestic producers were furnished.

xiii) Additional information from M/s Hanwha Chemical Corporation, Korea RP was also sought, which was provided.

xiv) The Authority Kept available non-confidential version of the evidence presented by various interested parties in the form of a public file maintained by the Authority and kept open for inspection by the interested parties as per Rule 6(7).

xv) Cost investigation was also conducted to work out optimum cost of production and cost to make and sell the subject goods in India on the basis of Generally Accepted Accounting Principles (GAAP) and the information furnished by the petitioner. The cost of production data of the following companies were considered and examined appropriately:–

xvi) ****In this notification represents information furnished by an interested party oil confidential basis and so considered by the Authority under the Rules.

xvii) The last date of submission was 24'x' June, 2002. On request of interested parties, extension of time was granted upto 10th July, 2002. Response of M/s Shanghai Chlor Alkali Chemical Co. Ltd., exporter from PR China was received on 22nd July, 2002 which has also been considered by the Designated Authority.

xvii) Investigation was carried out for the period starting from 1st, April, 2001 to 31st March, 2002 i.e. the period of investigation (POI).

B. VIEWS OF EXPORTERS, IMPORTERS AND OTHER INTERESTED PARTIES

1. PETITIONER'S VIEWS

a) PRODUCT UNDER CONSIDERATION

(i) The name of the product being dumped into the Indian market is Sodium Hydroxide generally known as Caustic Soda. Caustic Soda is chemically known as NaOH. It is an Inorganic Chemical classified under Chapter 28 of the Custom Tariff Act. Caustic Soda is a soapy, strongly alkaline odourless liquid widely used in diverse industrial sectors, either as a raw material or as an auxiliary chemical. It is mainly used in the manufacture of pulp and paper, newsprint, viscose yarn, staple fibre, aluminum, cotton, textiles, toilet and laundry soaps, detergents, dyestuffs, drugs and pharmaceuticals, vanaspati, petroleum refining etc. Caustic soda is produces in two forms- lye and solids. Solids can be in the form of flakes, prills, granules or any other form. All forms of caustic soda are the subject matter of the present petition.

Caustic Soda causes burn on contact with body tissues. Contact with eyes cause severe damages, swallowing results in severe injury. Caustic soda mist causes momentary stinging sensation in nose and throat. It reacts with strong acid very violently under boiling phenomena.

(ii) Caustic Soda is a basic product very widely used in diverse industrial sectors, either as a raw material or as an auxiliary chemical. It is mainly used in the manufacture of pulp and paper, newsprint, viscose yarn, staple fiber, aluminum, cotton, textiles, toilet and laundry soaps, detergents, dyestuffs, drugs and pharmaceuticals, vanaspati, petroleum refining.

(iii) Three technologies are available world over for production of Caustic Soda. The Indian industry is producing Caustic Soda using all the three processes. The three processes are:

Mercury Cell Process

Diaphragm Process

Membrane process

(iv) Even though all three technologies are being used in India for manufacturing Caustic Soda, Mercury Cells technology and Membrane Cells technology are being widely used in India.

(v) Indian Caustic Soda industry has been largely able to meet entire requirement Caustic Soda in India. The Indian industry was self-sufficient in its requirement ever since 1975. As mentioned in previous part, Caustic Soda has been in the list of imports permitted under OGL particularly for actual users since 1980-81. The imports were, however, limited because of the pricing policy of the Indian industry. The capacities installed by the producers in China and Korea are far higher than the requirement in their own country. Further, with the imposition of anti-dumping duties on a number of other countries, the producers in the subject countries are finding it lucrative to export to India. The excess capacities in these Countries have put tremendous pressure on the producers to look for markets outside their country. Resultantly, the exporters from China and Korea have quoted very low prices for exports to India. It would also be relevant to point out that the producers in these countries have at times not directly offered for supplies to India. Substantial volumes have been offered by traders in third countries for supply of Caustic Soda originating in these Countries. The offers being by traders, naturally, these traders have taken care of their margins also. The prices quoted by the producers in these Countries are, therefore, still lower. The petitioners believe that the prices offered are far below the associated cost of production. Thus, the exporter from China and Korea has resorted to dumping of Caustic Soda in the Indian market.

b) DOMESTIC INDUSTRY

(i) DCW Limited a multi product company involved in production of various products such as Soda Ash, Caustic Soda (Lye, Solid and flakes), Calcium Chloride, Soda Bicarbonate, Aluminum Bicarbonate, Salt etc.

(ii) Gujarat Alkalies & Chemicals Limited is also a multi- product company involved in production of wide range of products which include Caustic Soda, Chlorine Gas, Hydrochloric Acid, Hydrogen gas, Sodium Cyanide, Sodium Hydrochloride, Sodium Ferrocyanide, Methyl Chloride, Chloroform, Carbon Tetrachloride, Potassium Hydroxide, Potassium carbonate, Phosphoric Acid, Hydrogen Peroxide etc.

(iii) Search Chem. is a subsidiary of United Phosphorus Limited. SCIL is a multi product company involved in production of various chemicals such as Yellow Phosphorus, Iso Propyl Bromide, Thio di Phenol, Methylene Gluotaronirite, Acetyl Bromide, Para Nitro Benzyl Alcohol and Triphenyl Phosphorus Thionate etc. The company is also involved in production for Power i.e. Electricity.

(iv) Grasim Industries Limited is a flagship company of Aditya Vikram Birla Group. Grasim Industries Limited is a multi product, multi location and well diversified company involved in production of various products such as Viscose Staple fibre, White Cement, Sulphuric Acid, Carbon Domestic industry Sulphate, Rayon grade pulp, Paper, Stable Bleaching Powder, Man Made Fibre Fabrics, Man Made Fibre Yarn, Gray Cement, Articles of Cement Concrete, Industrial Machinery, Poly Aluminum Chloride, Chloro Sulphonic Acid, and Sponge iron, etc.

(v) Andhra Sugars Limited is a multi product, multi location company involved in production of Sugar, Acetic Acid, Industrial Alcohol's, Sulphuric Acid, Superphosphate, Chlorosulphonic Acid, Oleum, Aspirin, Carbon Dioxide, Alum, Diffusers, Chemical Equipment, Sugar Factory Boiling House Equipment's, Unsymmetrical Dimethyl Hydrazine, Cotton Seeds etc, Richburn and oil cakes processing, Refinery, Hydrogenation of oils, cattle and poultry feed, wind power, electricity, etc.

(vi) Bihar Caustic, Jayshree Chemicals, and SIEL (Chemical Complex) are involved in production of Caustic Soda and it's by-products only.

c) LIKE ARTICLE '

(i) There is no difference in the Caustic Soda produced by the Indian industry and imported from China and Korea. Caustic Soda produced by the Indian industry in general and the participating companies in particular is comparable in terms of characteristics such as physical & chemical characteristics, raw material composition, functions & uses, product specifications, pricing, distribution & marketing and tariff classifcation of the goods. The two are technically and commercially substitutable. The consumers have used the two interchangeably. Caustic Soda produced by the domestic industry should be treated as like article to Caustic Soda imported from subject countries within the meaning of the anti dumping Rules.

(ii) As discussed earlier in this petition, world-over, Caustic Soda is being produced y three processes. Indian industry is also producing Caustic Soda using all the three processes. However, difference in process does not mean difference in the product in terms of its physical & chemical properties, product specifications, marketing, pricing, consumer perceptions, tariff classification, etc.

d) DUMPING

(i) Producers in from China and Korea are involved in dumping the goods in India. The dumping has been largely resorted through traders in third Countries. However, the supplies were planned directly from these Countries.

(ii) Caustic Soda is a basic inorganic chemical and is used by a number of industries as raw material. It is primarily traded in bulk quantity and, therefore, the shipments are normally directly from the countries of origin. However, in the instant case and particularly in the tender floated by NALCO for purchase of very significant volumes, traders in third Countries have participated wherein the supplies have to be made directly from the subject countries.

(iii) NALCO had recently floated a tender for 100000 MT of Caustic Soda. A number of exporters participated in the tender floated by NALCO. The quantity of the tender floated is very significant.

(iv) Exporters from subject countries as well as other country against which investigation is under progress or which are now attracting duties participated in the tender. Details of the tender floated, exporter's name, agent's name, quantity offered, price offered, revised price offered, negotiated price at which order has placed by NALCO, landed value of imported material etc. are given in the "tender detail".

(v) It may be seen that NALCO has placed its orders for 87000 MT, which is more than combined imports of Caustic Soda in a year in India.

(vi) In addition to China and Korea RP, exporters and producers from Indonesia are also dumping Caustic Soda in the Indian market. It is the market information of the domestic industry that around 3500 MT materials shortly landing the custom port in India. It would be worthy to mention here that earlier the domestic industry had filed a petition for imposition of Anti Dumping Duty inter-alia on Indonesia. However, the investigations were not initiated against Indonesia. Getting benefit of the situation i.e. imposition of Anti Dumping Duty against some other countries and no duty on imports from Indonesia, the producers and exporters from Indonesia have now found this a good opportunity to dump the material at times of serious decline in the export price from several countries and faced with surplus unutilized capacity.

(vii) Efforts were made to get information on prices at which Caustic Soda is being sold by the exporters from Korea RP in their domestic market. We have also made efforts to get price lists of the exporters or price evidence for their exports to other countries or any other information from the published sources. We have been able to get information about the prices in domestic market of Korea RP from a leading international Journal. Reliance is being placed on the information published in the Chlor Alkali in this regard.

(viii) Chlor alkali regularly reports the prices of Caustic Soda in the domestic market in Korea. Thus, considering the prices given in the Chlor Alkali, calculation of normal value in Korea RP have been done. The normal value on this basis comes to US $ 227 pmt in case of Korea RP.

(ix) Massive dumping of Caustic Soda in the Indian market is causing material injury to the domestic industry. Further, the order placed by NALCO would cause further material injury to the domestic industry, as may be seen from the para on "Evidence of Injury".

e) INJURY

i) It is understood that the capacity of producers in subject countries is far in excess of the domestic demand in their respective markets. The huge volume of material offered to NALCO is a clear evidence in this direction. The producers are under tremendous pressure to sell the material. Vast Indian market is naturally quite lucrative to the exporters at the cost of Indian Producers. It is understood that capacity of Chinese Industry alone is more than 8 million MT, which is much more than the demand of Caustic Soda in China.

ii) The exporters are understood to have booked orders for significant quantity through their Indian agent/s. In fact, orders for 87000 MT have already been placed by NALCO, which alone is more than average annual imports of Caustic Soda ire India as also capacity of a number of individual producers in India.

iii) Our market intelligence suggests that a lot of dumped material is under transit and shipment is expected very shortly. Should the present trend of order booking continue, the domestic industry would loose significant sales.

(iv) The landed price of the imported material is significantly below the selling prices of the domestic industry. The volume of material for which order has booked is very significant in terms of demand of the subject product in India. Moreover, what should be appreciated is that should the producer in subject countries continue to sell the material at present prices in the Indian market, the domestic industry would not be able to hold even the present prices.

(v) The landed price of imports is significantly below the full cost of production and fair selling price of the domestic industry. The domestic industry would be forced to face cash losses in case it has to sell at matching prices. The order placed by NALCO has had severe depressing effect on the prices in the market, more so in the post proposed investigation period.

(vi) The dumping margins are very significant. The price at which material is being exported does not permit recovery of even cost of production leave alone profits on huge investments.

(vii) In the instant case:–

1. There is a history of dumping. Earlier the domestic industry has been injured from dumping of Caustic Soda in India by the exporters/ producers from Saudi Arabia, USA, Japan, Iran and France. The domestic industry requested the Designated Authority to impose Anti Dumping Duty. The Designated Authority, after a detailed investigation, recommended imposition of Anti Dumping Duty, which have since been imposed by the Central Government. After imposition of Anti Dumping Duty against these countries, producer/exporter from Qatar started dumping Caustic Soda in India. The domestic industry requested the Designated Authority to impose Anti Dumping Duty against Qatar also. The Designated Authority after preliminary investigations, recommended imposition of provisional duty. After initiation of the investigation against Qatar, producers and exporters from subject countries started dumping the material. Thus, there is a clear history of dumping of Caustic Soda in India by now.

2. The importers are well aware that the price at which the material is being exported from subject countries is a dumped price as the price is significantly below the reference price fixed by the Designated Authority in the earlier investigation. Evidently, the importers and consumers are well aware that the material is being imported at dumped prices;

3. The injury is being caused by the producers/exporters from subject countries in a short period. Immediately after imposition of duty against Saudi Arabia, USA, Japan, Iran, France and Qatar the producer in subject countries started dumping. Our market intelligence suggests that the exporter have booked huge orders, which are under process of exportation.

4. Sales to the tune of about 87,000 MT have been lost by the domestic industry in a single order;

(viii) The Sales volumes of the participating companies as provided to the Authority indicate that sales of the participating companies, which has been increasing till 2000-01 declined in the April-December 2001. Further, the sales volumes are likely to remain low, considering the significant volume of sales lost by the domestic industry.

(ix) The imports of Caustic Soda from the subject countries have increased dramatically. From a situation of off-and-on imports, the imports made by NALCO alone would be more than the combined volume of imports from all the countries and capacities of many a producers in the Country. The volume o'. imports is contained in Proforma IV-A. Further, dramatic increase in imports has resulted in significant increase in share of imports in (a) imports of Caustic Soda in India; and (b) demand of Caustic Soda in India.

(x) Production of the participating companies are given in Proforma IV A. It may be seen that the production of the participating companies, which has been increasing till 2000-01 declined in the April-December 2001. Moreover, the petitioners submit that the change in the production level alone may not indicate injury to the domestic industry. More important parameter is the price at which offers for sale have been made by the exporters from the subject countries and the prices at which the domestic industry has been forced to sell or may be forced to sell in view of the dumped imports from the subject countries.

(xi) Caustic Soda industry has provided very- large-scale employment in the Country. Any sickness in the industry would have crippling effect on the employment.

(xii) The petitioners have lost significant sales due to the dumped imports The NALCO order lost is a significant loss of sales for the domestic industry.

(xiii) Profitability of the participating companies is given in Proforma A. It may be seen that the domestic industry is making huge losses.

(xiv) Imports of Caustic Soda from Other Countries (excluding countries already attracting anti-dumping duties or countries against which investigation is under progress), are de-minimus or are at a price not causing any injury to Indian industry.

(xv) Demand of the Caustic Soda is increasing continuously. In fact, the demand has registered significant growth over the past five years. The domestic industry has sufficient capacity to meet the requirement of the Country. The changes in the demand have, therefore, not contributed to any injury to the domestic industry.

(xvi) Material injury has been caused to domestic industry from dumped imports from the subject countries. As stated elsewhere in the petition also, the domestic industry is producing Caustic Soda for the several years. The technology adopted by the domestic industry is comparable to the technology adopted by the exporters. There is no significant difference in the manufacturing process. It is submitted that the lowering of prices by the exporter from the subject countries alongwith the dumped imports from Other Countries (which are already attracting duties are against which the investigations are in progress) is the reason for the present injury to the domestic industry.

2. IMPORTER’S VIEWS

1. M/S NALCO

a) PRODUCT UNDER CONSIDERTION

(i) MANUFACTURE OF VALUABLE BY PRODUCTS ALONGWITH CAUSTIC SODA-The Petition deliberately does not disclose the fact that the process of manufacturing Caustic Soda also leads to the manufacture of Chlorine and Hydrochloric Acid The Petition itself admits that the Petitioner is engaged in protecting the interests of the domestic producers of not only Caustic Soda but also Chlorine, which goes on to show that there is a substantial monetary benefit obtained from the production of Chlorine. This is neither reflected in the particulars furnished by the Petition with respect to the cost of production being apportioned between the two products nor is the realisation resulting from the Chlorine mentioned therein. It is submitted that the cost realisation of the Chlorine is substantial and any Petition with respect to Caustic Soda would be incomplete without the examining the Chlorine production as regards both determination of dumping and injury. This fact is also important as the description of the domestic industry expressly specifies that all the companies are multi product companies or are engaged in the production of Caustic Soda by products 3 he implications on the cost of production are dealt with in greater detail subsequently in the present response.

(ii) NALCO verily believes that the Petitioner has also tiled a petition for imposing Anti Dumping Duty on Chlorine. It is further verily believed that the domestic industry has sought to make out a case of dumping and injury therein by attributing the entire production cost towards production of Chlorine. In light of the aforesaid, it is respectfully submitted that the Hon'ble Authority in accordance with its powers under R. 8 of the Anti Dumping Rules, 1995 should seek a declaration on affidavit with respect to Chlorine petition or through such other appropriate means from the Petitioner, in order to verify the accuracy of the information furnished the in pres6nPetition. The Hon'ble Authority has in the past sought such an assurance in the investigations initiated with respect to the import of Iso Propyl Alcohol, Case No. 21/1/2000 DGAD.

b) DOMESTIC INDUSTRY

(i) The inclusion and support of the domestic producers mentioned in the Petition does not disclose the true factual picture with respect to the act solely responsible for the present Petition i.e. the NALCO tender. An examination of the NALCO tender in question (the Tender) and the other tenders of NALCO in the past would clearly disclose the absence of any cause of action in favour of the domestic producers specifically supporting in the Petition. The industries expressly supporting the present Petition have not in past participated in the tenders of NALCO rue the cost logistics arising from their geographical location The members of the domestic industry who have participated in the tender process have either insufficient quantities to satisfy the tender quantity or have expressed their inability to transport the quantity. A detailed description of the logistical problems is set out hereinbelow.

(ii) NALCO's annual requirement of Caustic Soda for manufacture of Alumina is approx. 100,000 DMT on 106% NaOH basis. The Caustic Soda is purchased in lye form with approx. 50% NaOH content. As such, total quantity of Liquid Caustic Soda required by NALCO works out to 200,000 MT

(iii) The problem associated with supply of caustic soda to NALCO is that its alumina plant is located at Damanjodi, which is at a higher altitude. Therefore the railway does not allow 4 wheel wagons for dispatch to Damanjodi and thus supply can only be made through 8 wheel wagons with air break system. Such wagons being not available with railway, therefore none of the Caustic Soda domestic manufacturers can supply NALCO by rail.

(iv) Given the peculiar nature of Caustic Soda and as also admitted in Petition i.e. a quantity of Caustic Soda supplied would be twice the amount needed under a tender, at 50% NaOH basis, even supply by road tankers is not an economically viable option. A road tanker can carry only limited quantity of approximately 5–6 DMT (10-12 Liquid MT Caustic Soda). Therefore, only industries, which are geographically proximate from Damanjodi like M/s. Andhra Sugar, M/s. Rayalaseema (in Andhra Pradesh) and M/s. Jayshree Chemicals in Orissa, are able to use the road route option. Even with respect to the aforesaid industries the quantity supplied are small for reasons mentioned above.

(v) Accepting larger quantity by road is problematic for unloading at plant given the quantity supplied in a tanker. For supply of 2,000 DMT in a month number of tankers to be handled works out to 400 nos. i.e. 16 - 20 tanker a day. As such, accepting more tankers will be physically improbable because for supply by tankers, samples are required to be collected from each tanker and analysed for specification confirmation and weighment. The process of verification is time consuming and involves additional cost for testing.

(vi) The major supply to NALCO comes through the Vizag port from sea, where it has its own Caustic Soda storage tanks to store approx. 30,000 Liquid MT. NALCO uses its own railway tank wagon for transporting Caustic Soda from Vizag to Damanjodi. As regards supply by sea only 2 domestic suppliers namely M/s. DCW and M/s. SPIC had offered to use the sea route. It is stated that none of the domestic manufacturers on western coast of India including but not limited to those supporting the Petition have offered to supply Caustic Soda using the sea route to NALCO due to high. freight element. M/s. IPCL had once offered to sell Caustic Soda to NALCO subject to the condition. that NALCO should arrange for lifting the same from the IPCL plant, which was not acceptable to NALCO given the logistic problems in transportation mentioned above. It is further stated manufacturers on the western coast either do not have arrangements for shipment by sea or sea freight to Vizag and are unable to supply Caustic Soda to NALCO.

(vii) In light of the aforesaid the Petitioner's true motivation of seeking the support of the domestic producers mentioned is adequately borne out, namely to ride on the shoulders of the industries not actually supplying NALCO and to ensure that the Petition does not suffer from the lack of numbers required to fall within the definition of domestic industry under R. 2(b) of the Customs 7ariff (Identification, Assessment and Collection of Duty or Additional Ditty on Dumped Articles and for Determination of Injur) Rules, 1995 (the Anti Dumping Rules). The aforesaid rule sets out the definition of "domestic: industry" and requires that the domestic producers filing the Petition should constitute a major proportion of the total domestic production. Though the domestic producers constitute a major proportion of the domestic production the definition of domestic industry in the facts and circumstances of the present case would have to be determined in accordance with the proviso to the aforesaid rule under sub clause (ii), which reads as follows:

"Provided that in exceptional circumstances referred to in sub rule (3), of Rule 11, the domestic industry in relation to the article in question shall be deemed to comprise two or more competitive markets and the producers within each of such market would constitute a separate industry if–

(i) the demand in the market is not in any substantial degree supplied by the producers of the said article located elsewhere in the industry"

(viii) Therefore the investigation of the Hon'ble Authority should be confined to the domestic producers actually participating in the NALCO tenders in the past i.e. from 1994-95 to 2001-2002. The capacity utilisation, cost of production and injury determination should be sought specifically from the aforesaid producers A table listing out the various domestic producers who have supplied/offered to supply NALCO alongwith the quantity offered is provided on confidential basis.

c) LIKE ARTICLE

(i) It is submitted that the Custom Tariff classification deals with that Caustic Soda under Tariff 28.15.11 relating to solid Caustic Soda and 2815.12 relates to liquid Caustic Soda. Though in the present petition under Part-1, Part-3, the petitioner has mentioned that Caustic Soda produced in India are predominately produced by using Mercury cell technology and Membrane cell technology, but the details of these technologies have not been intentionally furnished Petition. Whereas the same domestic producers while filing Anti Dumping petition for imposition of Anti Dumping duty on Caustic Soda imports from Qatar had our the manufacturing process under both the technologies.

(ii) A perusal of the process description in the earlier petition, discloses that the process of manufacture of Caustic Soda results in the production of three distinct products i.e. Caustic Soda Liquid , Chlorine and Liquid Hydrochloric Acid It may be mentioned here that for every 1 DST of Caustic Soda manufactured, approximately 0.8 MT of Chlorine is also produced. The Caustic Soda comes out of the process is in liquid form having NaOH concentration of around 47% - 50% and balance is water. Thereafter, liquid Caustic Soda has to be further processed in order to manufacture solid Caustic Soda in the form of Flexes/Pearls. As stated herein above the Petitioner has deliberately not disclosed the fact that the process of manufacture of Caustic Soda, results in the production of two commercially valuable co-products i.e. Chlorine and Hydrochloric Acid. It is further stated that the Petition does not disclose the additional process involved for converting Liquid Caustic Soda to Solid Caustic Soda with the intention to conceal the actual cost of production of Solid and Liquid Caustic Soda and the Petitioner is put to strict proof thereof.

d) INJURY

(i) A perusal of the installed capacity & production status given in the Petition at Annexure-VIII it may be seen that the 5 parties who are the only participants in NALCO's tenders, are producing almost around 90% of installed capacities. Further it can be seen that these parties have only offered quantities which can satisfy at an average 50% - 60% of NALCO's requirement and they represent hardly 15% of domestic production. Therefore when the parties who can be affected by NALCO's import, are producing above 90% of their installed capacities and not able to offer quantities required by NALCO, it is hard to believe that Import by NALCO can sustain any material injuries to these industries. Further other parties in the petitions having no interest in NALCO's tender and unable to supply due to logistic problem can by no means be affected by NALCO's import. NALCO reserves its rights to file further submissions when such information is furnished by the industries as indicated.

(ii) The imports figure indicated in the Petition with respect to Caustic Soda imports in Annexure-II and claimed as being ostensibly based on reports of DGCI&S, are denied as being misleading and are quoted out of context. The imports have been considered taking Solid, Flexes and Liquids together whereas it is submitted that these three products are completely different from each other in all aspects. It is further submitted that the manufacturing process, production cost and selling price for these products are different. Furthermore, even the end uses of these products are different. Therefore, considering all these products under a single head for purpose of determining Anti Dumping Duty is not only misleading but also constitutes a misrepresentation. It is stated that NALCO has been only importing Liquid Caustic Soda. In light of the aforesaid it is submitted that each of these products should be considered separately. Therefore their respective importation effect, prices and dumping margin should also be determined separately. It is further submitted that the solid and liquid Caustic Soda have different uses, pricing, consumer perceptions and tariff classifications and cannot be treated as "like articles" under R. 2(d) of the Anti Dumping Rules, 1995.

(iii) The international price as can be seen from the Chlor-Alkali Report, on which Petition has also placed reliance, shows wide variation in the prices of these products i.e. Solid and Liquid Caustic Soda. For example for the month of April, 2001 in USA the Caustic Soda Liquid price is shown in the range of US$ 300 –325 on FOB US Port basis, the Chlorine price under spot market was in the range of US$ 0-40. However, if the pricing position is seen for the month of March, 2002 i. e. the end of investigation period, it shows that the Liquid Caustic Soda price in USA sport market was US$ 50-75 per DMT on FOB US Port basis, whereas the Chlorine spot price was US$ 80-100. Similarly in Europe market, the Caustic Soda price in April, 2001 was in the range of US$ 325-355 per DMT FOB at that time the Caustic Soda Flexes / Pearls price was US$ 350-370 per MT FOB. Whereas in March, 2002, the Caustic Soda Liquid price was in the Europe market was US$ 90-110, whereas Flexes / Pearls price was US$ 260 -290 per MT.

(iv) The above figures show that there can be no comparison between the price of solid Caustic Soda with that of liquid Caustic Soda. Even in liquid Caustic Soda there will be variation in price between Mercury process and Diaphragm process and considering all the prices together to arrive at any decision is totally misleading. The above international price trends shows that when the realization from Caustic Soda is high, producers are willing to supply Chlorine at a lower price to meet the Caustic Soda demand. Likewise the situation reverses when there is demand for Chlorine. Chlorine price can go up even upto US$ 300 per MT and at such time Caustic Soda can be supplied at a lower rate. This happens regularly in the international market since the producer is interested in total realization i.e. from Caustic Soda, Chlorine and Hydrochloric Acid and from any single product. In light of the aforesaid link between these commercially valuable products Anti Dumping Duty determination can only be done if the prices of all these products are considered to determine whether there is dumping and the resultant injury therefrom in a market. Without this examination, the whole process would lead to an incomplete understanding of the Caustic Soda market, which would result in misleading and incorrect conclusions.

(v) It is submitted that an indigenous producer who participated in the Tender, M/s. DCW and who is also a part of the Petition, had offered an ex-work price of Rs. *** per DMT. The exchange rate (i.e. Bill Selling Rate ) prevailing on November 9, 2001 was US$ 1 = Rs.48.38. Therefore, the indigenous ex-work price offered was US$ ***. Against this imported landed price considering Custom Duty rate of 35% works out to around US$ *** per DMT. Therefore, the imported landed price was much higher than the offered ex-work price of Caustic Soda prevailing in domestic market. The domestic offers because of logistic problems and the higher element of freight for supply mentioned above was not competitive.

(vi) It is submitted that during the period of investigation that the domestic industry was selling Chlorine at ex-work price of approx. Rs. *** per MT in September, 2001. Therefore, the total realization to Indian manufacturers with Caustic Soda and Chlorine together works out to Rs. * * * per MT, which is much higher than the cost of production of Caustic Soda, Chlorine together. From the above, it is adequately shown that domestic industries has filed the present Petition solely motivated by the desire of higher profit margins due to which they are losing business to overseas parties. Therefore, it is not correct to state that international parties are supplying at much below the normal value as being alleged.

(vii) The Alkali Association represents the Association of Indian Manufacturers of Caustic Soda and Chlorine. Most of these manufacturers have multi-product plant and part of the Chlorine and in some cases 100% Chlorine is utilized by then' for manufacture of value added products and they get larger margins by selling Chlorine. For them, Caustic Soda is only b y-products. The very purpose of Anti- Dumping Petition by the Alkali Manufacturers Association these manufacturers have conspired to keep Caustic Soda price at a level, which will be just lower than the imported price of Caustic Soda with Anti Dumping Duty. It may be mentioned here that out of the countries, who are capable of exporting Caustic Soda to India due to Petition by these Alkali Manufacturers Association arid due to non-participation of the countries on whom Dumping was alleged, Anti Dumping Duty have been levied in respect of 5 countries i.e. USA, France, Saudi Arabia, Iran and Japan. Provisionally Anti Dumping Duty has also been imposed from imports from Qatar. With imposition of Anti Dumping Duty from Korea and China almost 90% of exporting countries of the world that can export Caustic Soda will get covered. It may be seen that in March, 2002 when the whole world can buy Caustic Soda at the prevailing market price of US$ *** FOB and considering average freight of US$ *** from most of the countries of the world to India the landed price would have been US$ *** C&F. Against this with Custom Duty of 35% then applicable, the landed price works out to US$ ***. Against this the Hon'ble Authority should consider the landed price as US$ *** which is arrived at by taking into account the Anti Dumping Duty applicable now. The additional implication per MT over normal international price works out to approx. US$ *** per MT with an exchange rate of Rs.48.38 this works out to Rs. *** per MT. For NALCO's requirement of 100,000 DMT the additional implication will be Rs. ***. When any Aluminum Manufacturers in the world can buy at a price of US$ *** per DMT with the imposition of Anti Dumping Duty in India, NALCO will be forced to buy at US$ * * *. This will only make Indian Aluminum Industry non-competitive and will give rise to increase in indigenous price of Aluminum, which will result in import of Aluminum. The Indian Alkali Industries who are already producing almost to the full capacities and their productions are increasing their profit margin are increasing, but inspite of above, they want further profit by imposition of Anti Dumping Duty which is against the object and spirit of India's commitments to the WTO. There is no injury to indigenous industries and on the contrary this Anti Dumping Duty is solely motivated by the desire of the indigenous manufacturers to join hands and increase the price of Caustic Soda much above their cost of production and gain supra competitive profits. The Designated Authority should look into this game plan of Alkali Association and should reject their, Petition in view of misrepresentation, suppression and submission of distorted facts.

c. DUMPING

i) It is incorrect to state that all countries in the world are dumping Caustic Soda into Indian market. The Chlor-Alkali report based on which the Petitioner has endeavored to establish the normal value of the product in countries like China and Korea gives details of price summary on monthly basis as prevailing in international market. The copies of price summary report for the period of investigation from April, 2001-March, 2002 is submitted herewith and marked as ANNEXURE “C”. A perusal of the report, shows that the prices of liquid Caustic Soda per DMT was in the range of US$ *** in USA US$ *** in western Europe, US$ *** in eastern Europe in April, 2001 on FOB basis. At that time the export price in Far East was in the range of US$ * * * per DMT. During the year gradually the Caustic Soda price had started falling and by March, 2002 the Caustic Soda price in USA had come down to US$ *** in Western Europe, US$ * * * in Eastern Europe, US$ * * * in Far East to US$ * * * per DMT on FOB basis. This being the nature of variation of price for this product in the whole world, if the domestic price in April, 2001 is considered in a particular country it will give a high value of Caustic Soda whereas the same domestic price in March, 2002 would be drastically different. Since the variation is in the range of 500% -600°lo for this product in a period of one year, it will be erroneous to rely upon the figures given by the Petitioner at a particular period are only considered in determining the normal value. It may be appreciated that the normal value in USA is US$ *** in April, 2001, the same normal value has become US$ *** in March, 2002. Therefore, in order to find out whether there is any dumping or not, one has to go to the point when the contract for import was finalised and what was the price prevailing at that period in those countries. This is required as the prices changes not only on a month to month basis but also very drastically. Therefore any conclusion drawn on the basis of isolated figures given by Petitioner would be erroneous and not reflect the true Caustic Soda market.

(ii) The allegations that NALCO's import order of 88,000 DMT placed at a price of US$ *** for Membrane / Mercury grade and US$ *** for Diaphragm grade is being imported at less than normal value and is therefore being dumped into Indian market is denied as being false and misleading. NALCO invited Global Press Tenders for its annual requirement and the parties submitted the tender on September 28, 2001. The commercial points were clarified and thereafter prices were opened. The price bid opening was held on November 9, 2001. From the pricing summaries given in the Petition, it may be seen that the C&F, Visakhapatnam price offered by parties from Korea, China, Romania, Qatar, Iran in the tender was in the range from US$ ***. It may be appreciated that since this tender was submitted in September, 2001, the international price of Caustic Soda as prevailing in September is relevant as parties participating in the tender consider the prevailing international price and assume the price trend and quotes in the Tender. Due to logistic reasons, the offers from Far East were more competitive given the freight element. From the Chlro-Alkali report of September, 2001, it may be seen that the prices in Far East was in the range of US$ *** per DMT on FOB basis. The freight charges from China and Korea are in the range of US$ *** per DMT showing that for the exports from Far East the available international market price on C&F India ports will works out to US$ *** per DMT. Further the trend of price was downward for Caustic Soda liquid during that period whereas the Chlorine prices had started picking up. Considering this, the price finalized in NALCO's tender is purely as per the prevailing international price and therefore cannot be considered as a price below the normal market price.

2. M/S Grasim

(i) M/s Grasim has submitted that they have never imported Caustic Soda from any country till now rather have purchased Caustic Soda from Indian manufacturers.

3. M/s Transpek Industry Limited

a) INJURY & OTHER ISSUES

(i) We would like to inform you that we do not use Caustic Soda in our manufacturing activities. However, we would like to present the indirect effect of dumping of Caustic Soda in Indian market.

(ii) We use Chlorine in large quantities. Chlorine is manufactured by plants like GACL and is a co-product with Caustic Soda.

(iii) As a result of dumping of Caustic Soda by manufacturers in China and Korea, the manufacturers of Caustic Soda and Chlorine have to reduce their prices of Caustic Soda to face the competition. The loss incurred by them in disposal of Caustic Soda will have to be compensated by them by a corresponding increase in price of Chlorine.

(iv) As pointed out above, we shall be forced to pay higher prices of Chlorine which is consumed by us in large quantities. In fact, the prices of Chlorine have been revised upwards from Rs.4750/- per tonne in January to Rs.9350/ per tonne in June, 2002.

(v) It will be observed that correspondingly prices of Caustic Soda have decreased from Rs.12810/- per tonne in January, 2002 toRs.8960/- per tonne in June, 2002. Some of the products like Thionyl Chloride, in which Chlorine is used, are being exported by us. These exports are likely to suffer as the prices of our product in international market would not be competitive.

(vi) We therefore strongly plead your taking suitable action by imposing anti dumping duty on Caustic, which will go a long way in stabilisaing the costs of Caustic and Chlorine to a natural level, and thus help Chlorine based industries situated in and Gujarat.

4. M/s Deepak Nitrite Limited, Nandesari

a) INJURY & OTHER ISSUES

(i) We consume Caustic Soda Lye in manufacture of our product, Sodium Nitrite. We are principal producer of this material in India and also export around 10-15% of our production.

(ii) Caustic Soda Lye is one of the very basic ingredients which is used by almost all chemical industries, and hence any action which might increase the price, will have a cascading effect on the price and competitiveness of range of chemicals. It will reduce the competitiveness of Indian end-user industry vis-a-vis given material from abroad.

(iii) Manufacturing of Caustic Soda Lye concurrently produces chlorine, hydrochloric acid and hydrogen. Overall competitiveness of chloro-alkali industry depends on availability of balanced demand for this basket of products as well as limitations in storage of chlorine and hydrogen. Depending on overall industrial growth, different regions have different demand pattern, and hence price realisation of Caustic Soda Lye alone should not be considered as deciding factor. One should rather check overall price for baskets of products, i.e. main product and co-products, in an exporting country to determine whether exporter has dumped material to India.

(iv) The petitioner has claimed Normal Value of subject goods in Korea RP on the basis of selling price i.e. export price. However, this appears to be hypothetical because to the best of our knowledge there is negligible import of Caustic Soda Lye into India from Korea.

While announcing the Normal Value of China, the Authority has considered the price of Caustic Soda Lye only and the prices of other products such as chlorine, hydrochloric acid and hydrogen does not appear to have considered.

(v) The petitioners have indicated CIF price as per the DGCI&S data wherein they have referred to the tender floated by NALCO. NALCO is the largest consumer of Caustic Soda Lye in the country and the tender price received by them cannot be considered as the reference price for this purpose.

(vi) Principal cost of components in the manufacture of Caustic Soda Lye and its co-products is cost of electricity. Majority of countries names in the investigation have significantly lower cost of Electricity, i.e. almost 1/3rd to 1/5" of Indian cost, enabling them to sell the product at lower price as compared to domestic manufacturers.

(vii) Capacity set up in India are far in excess of Indian demand, which leads to poor utilisation. It should be noted that percentage of imports as such is insignificant and, in fact, is reducing in last three years. The price of imported product is not falling, but has more or less stabilised. It should be noted that Caustic Soda Lye is being imported from various countries, i.e. from continents of Europe, America and Asia. The price levels of Caustic Soda Lye exported to India are thus a reflection of overall competitiveness of Caustic Soda Lye industry abroad based on economy of scale afforded by large size plants, cheap power and other raw material as well as matching demand pattern for the basket of products.

(viii) Under these circumstances, we request the Designated Authority to kindly examine the issues in overall perspective while ascertaining the nature of dumping, if any.

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